Chris Walker: Problems for the Northern Powerhouse go beyond housing

The Northern Powerhouse needs house building at its foundations.
The Northern Powerhouse needs house building at its foundations.
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THE new Northern Powerhouse encompasses Manchester, Liverpool, Leeds, Sheffield, and Hull city regions, as well as the North East. Together, these city regions have a population of over 10 million, bigger than London’s 8.6 million.

During the last 35 years, the Northern Powerhouse areas have built on average 25,000 homes a year, which is significantly higher than London’s 17,000 homes a year (England 150,000 a year).

The Northern Powerhouse areas as a whole have broadly pulled their weight in contributing to the nation’s house building, measured on a per capita basis. However, whereas the ‘Northern Powerhouse’ built 290,000 homes during the 1980s, it built only 210,000 homes during the last decade to date, or 28 per cent fewer.

This broadly reflects the decline in house building nationally (26 per cent fewer). London, by contrast, built 150,000 homes during the 1980s and 200,000 during the decade to date, or 28 per cent more. So in national share terms the Northern Powerhouse areas have broadly flat-lined and London has doubled. Indeed London is now building as many homes as towns and cities that come under the auspices of the Northern Powerhouse.

London’s population was of course in decline until the late 1980s – so it is little surprise that so few homes were built in the capital during the 1980s. However, London’s population has grown rapidly since then and the struggle of housebuilding to keep pace and London’s rocketing house prices as a consequence is well documented. In 2004-2013 alone, London’s population grew more than twice as fast as the Northern Powerhouse areas.

Population is a key driver of the demand for new housing in any area or locality. This in turn is driven partly by economic performance or jobs. So the contrasting trends in house building of the Northern Powerhouse and London is likely to be a reflection of their contrasting fortunes economically. In other words, house building is a barometer of economic success – London has done well and the Northern Powerhouse has done OK at best.

For the Government to make the Northern Powerhouse a success, it will have to take a holistic policy approach which goes far beyond just housing.

That is also about leadership and governance (yes, devolution), to achieve the overall rebalancing the UK economy both geographically and sectorally.

Clearly there would be little use in ramping up house building in the Northern Powerhouse without both people and jobs – in the economic language, supply cannot create its own demand.

Within the Northern Powerhouse, there is a mixed picture of house building over the last 35 years. Of the Northern Powerhouse six city region areas, Leeds (the second biggest in population terms) has performed the strongest in terms of house building during the latest decade – building nearly as many homes as in the 1980s and outperforming the national average.

Slightly further afield, Calderdale has excelled with a 51 per cent increase in the number of homes built. Indeed, Calderdale is the only district in the Northern Powerhouse that has outperformed London as a whole.

Manchester city region (the most populous) and the North East and are the next strongest house builders, each with a 26 per cent fall in the number of homes built in the latest decade compared to the 1980s, again in line with the overall Northern Powerhouse and national picture.

Within these Manchester and Durham districts are the shining lights with more homes built in the last 10 years than in the 1980s. Stockport and North Tyneside have seen the steepest falls.

Next, and very closely behind, is Sheffield city region, which has seen a slightly steeper fall in house building (of 29 per cent), with Sheffield itself seeing the worst fall of 43 per cent.

Yet, Sheffield city region contains one of the strongest performing districts of the entire Northern Powerhouse – Barnsley, where nine per cent more homes were built during the last decade than in the 1980s, illustrating how chequered the trends in house building are from one district – and city region – to the next.

But lagging far behind the rest, Liverpool city region and Hull and Humber city region have seen the steepest falls in house building – down 41 and 48 per cent respectively, though the latter figure is possibly distorted by boundary changes in the mid-1990s. Some of these areas also face some of the most deep-seated economic problems in England.

One of the greatest successes of the Thatcher government in the 1980s was halting and then reversing Britain’s economic decline. That decline was relative – yes, the UK economy grew but just more slowly than the rest of developed world. Perhaps in years to come we’ll measure the Government’s success in creating a Northern Powerhouse in terms of how far we arrest the relative decline of the North compared to London.

Chris Walker is the Policy Exchange’s head of housing, planning and urban policy.